tv Worldwide Exchange CNBC April 8, 2010 4:00am-5:59am EDT
it is thursday, the 8th of april. welcome to "worldwide exchange." the headlines today, here in asia, as the u.s. treasury secretary tim geithner heads to beijing, china warns of the pit falls of a stronger yuan. >> in europe, ba confirms the merger of the biggest airline. >> and maybe the third time is a charm. us airways and united are
reportedly in merger talks. >> hello. i'm christine tan in asia together with ross westgate and nicole lapin. it is 4:00 p.m. here in singapore. let's get a quick view of where asian markets are trading or have closed the session today. a bit of a correction going on, as you can see. some fears of high interest rates in the u.s. prompted profit taking. some investors cashed in on some of those efforts. the stronger yen is really hurting the exporters. the shanghai composite down 0.9%. the hang seng is off 0.3%. elsewhere, in south korea, the picture is looking brielter. the bombay sensex down 0.8% and the aussie market down 0.5%. i want to take a quick look at the thailand market. bear in mind, we have some
protests going on in this particular market. the market is behaving a little better than what's going on politically. we don't have that chart for you, but that seems to be the situation we continue to watch in thailand. let's check out the cnbc ftse global 300 index. this is how it's looking for the moment. let's pull up the chart for you. down 27 points because of the correction happening here in asia. 4,6 22. ross, good to see you. not a good day here in asia. >> yeah. we've got bigger losses this morning, most of them down over 1%. basic resources and banks right now the biggest losers. ftse 100 down 1% along with the xetra dax. the cac 40 down 1.5% and smi down 1%. nicole, good morning to you. >> good morning to you, ross. we're feeling the same type of situation here, as well. stocks were down about 1% yesterday, pulling back from the lows that the dow finished off
10,797. futures are down at this hour about 32 below fair value. energy stocks were among the worst performers yesterday losing about 1% as oil declined. ross. >> now, stocks are down. we've got eyes on what's going on with central banks today. the bank of england is due to keep them straight. so is the ecb. sylvia, i suppose much of the news ow of the euro zone is around austerity measures and what's going on in greece, as well. how much austerity is going to feedback into policy decisions? >> we're very much playing across several corners here at the moment. monetary policy, the ecb is relatively noiselessly out of liquidity measures and they can't afford to tiptoe out of it. we didn't have that much
addressing quantitative easing here. the economy is relatively in no trouble zone at the moment in terms of the straightforward fundamentals. continental europe, the core europe performing if anything a little better than expected, especially the german economy looking more resilient than expected. also, if you look at the labor market in no trouble zone, it doesn't look as if you're going to get there any time in the future. and the rest is about the greece, greece, greece and more greece again. how much collateral damage on the fundamental side we're going to see. but in all honesty, there isn't a lot the ecb can do about it, except when you look at the collateral issue. we know that the ecb will review general collateral requirements and the haircut on collateral requirements and that could get interesting in the greek scenario. but again, it's a little bit of
a sideline to the problem now. >> let's bring in darius, chief investment strategist at sjs market. derek, it's pretty clear, in the oecd countries in the states, in europe, in the uk, policy is going to stay low for quite some time. so how much is that liquidity that we're creating in the west going to keep pumping into the east to, in fact, create bubbles there? >> indeed, g3 markets will be on hold until at least the second half of next year. there will be more conversations for investors to sell short the yen, maybe even the dollar and to buy assets in emerging markets such as in asia. however, whether or not they will be doing so will depend on the outlook for the global economy overall. and i think that sometime in the second quarter, markets will begin a major downturn on
concerns over deficit in those major economies, only in the smart ones like greece. and this, i think, will put the end to the trade and the flow of money into emerging markets. so it will not take much longer for those flows to be reversed. >> so low u.s. rates will stop having an impact in hong kong, will they? >> well, investors will be too afraid to put a lot of new capital to work elsewhere. obviously, it may not that some investors will continue in those best performing markets such as in china. but by and large, i think the upward trend that we have seen in the past year and the inflow in emerging markets will come to an end very soon because
investors will focus on the risk of the greek situation spreading elsewhere with government unable to continue funding fiscal stimulus because the market may not give them the money. >> darius, just take a pause. obviously, we have a big meeting going on in braug. we're going to have some nuclear arms talks as barack obama has been talking about a zero nuclear world, a very lofty ambition. nicole. >> indeed, ross. a deal that would create the nation's second biggest carrier, talks are combined with delta and northwest have been going on for weeks but aren't in the advanced stages. in 2000, united airlines and usair struck a $4.3 billion deal only to be shot down by the justice departments and their
unions, for that matter. a second deal in 2008 was opposed by a pilot's union. us airways shot up 20% in after hours trading on wednesday. united fell about 1% in late trading. darius, let's continue this conversation. our guest host, is this time actually going to go through? as i mentioned, we've tried this situation before to no avail. >> well, i think that the current market conditions with global growth recovering and the u.s. economy doing much better may provide more favorable background for m&a activity. at the same time, we have seen a big jump for fuel prices. so there is motivation to stream line and cut costs. so it may well be that this time around, the merger attempt will be successful. i don't think that regulators
will provide too much opposition. although i would still be concerned about the unions. but i think there is a good chance at this time it will go through. >> hey, darius, moving on to the markets if we may, dow close to 11,000, kind of backed away from it. there's a correction going on in the asian markets right now. what is actually going on right now? are we looking at a big pullback, something more serious, or is this just a blip? >> what happened yesterday and standard a minor correction. so i wouldn't be too worried about those today. however, we have to admit that much of the rally in equities over the past year have been fueled by abandon liquidity and this increasing liquidity is coming to an end. it already has in the u.s. with the fed no longer expanding its balance sheets. the same has happened in europe so those liquidity conditions are not as stimulus as they used
to be. like i mentioned before, markets will start looking forward to the time when fiscal stimulus starts to run out. this will happen in china and the u.s. this year. usual economic developments proceed by two quarters. so if the global economy does happen by tend of this year, sometime in q2, equity markets may start to fall. >> good thoughts, darius. let's continue with some headlines we're following from around the world for you today. it is day two of hearings by the financial crisis inquiry commission. chuck prince and chairman robert rubin are the ones testifying today. rubin, with his with hearings on wall street and president clinton's secretary should have taken a more active role. earlier in the week, alan
greenspan insisting that the fed lacks the wording to regulate nonbank lenders that issue the subprime loans. >> and those that have been talking, ba and iberia have signed a merger agreement. the ceo has told cnbc that he's confident regulators will approve it. >> i think the concessions that have been offered in terms of the eu and demanded or requested i think are sufficient to address the issue. and i'm optimistic that we will get the formal approval, looking forward to it, as well. >> leading up to the agreement was stretched out for 20 months and stretched out by ba's pension deficit issue. which they think they've sorted out now. >> ross, u.s. treasury secretary timothy geithner is apparently in hong kong meeting with the
chief executive and other officials. in a closed door session today, the u.s. consulate says geithner is headed for beijing and is due to meet with officials today. well, the chinese central bank adviser says he believes a sudden rise in the yuan will hurt the global economy. u.s. consumers will have little to benefit from a rise. china should take the yuan to a battle of trade weighted currencies within the next few years. meantime, the pboc says it has drained well over $16 billion from the money markets through its open market operations. this is part of the central bank's attempt to head off long-term inflationary pressures. nicole. >> coming up on "worldwide
these shots from prague where president medvedev is meeting with president barack obama to discuss a new nuclear treaty. meanwhile, on the fixed income markets, the 10-year bund yield is just nudging down. futures are higher today mainly because we had a record setting demand of $21 billion auction of 10-year nodes in the u.s. we are concerned about what's going on in greece and the spread has been widened out there. we hit a lifetime high of 413 basis points on the country's debt problems. the positive note is what happens to that u.s. auction. the bid to cover ratio was a record high, so that has boosted treasury prices and brought a certainly amount of relief to international investors, christine. >> right, ross. let's take a look at the currency markets. we are watching the japanese yen
closely. risk aversion really abating n markets. that is pushing the yen higher, dollar down against the yen at 93.12. euro under pressure against the dollar, 1.3288. sterling continues to be under pressure, 1.5171 and euro/sterling, 0.8756. >> and christine, u.s. investors get more fed speak today. weekly jobless claims are forecast to drop to a total of 438,000. fed governor elizabeth duke speaks about financial education at 8:30 in the morning. at 2:45 p.m. minneapolis fed president kocherlakota is n going to talk about the balance sheets. at 4:00 p.m., vice chairman donald kohn is talking about the economy and at 10:30, fed chairman ben bernanke is spe speaking at an awards center in
washington tonight. most retailers report same store sales today. analysts expect sales to run by 50%. people are already buying bikinis. christine, summer is a coming. >> nice tidbit to know there, nicole. the thai government called off a visit to vietnam for a southeast asian summit. >> translator: even though the government forced the law at its best, they still violated and more importantly, their actions are becoming more illegal. >> for the latest on the situation in thailand, it's talk about jason zebb, from tomp sob reuters in bangkok. jason, nice to have you with us.
we know the prime minister has declared a state of emergency. what's the latest? what can you tell us? >> we have about 10,000 red shirt protesters gathering in the marketplace. they've been very defiant. they have no plans to leave. they're planning what they bill is their largest protest ever. in this protest cycle tomorrow, so they're planning what they describe as a historic protest beginning on the streets at 9:00 a.m. in bangkok. they're obviously ignoring the emergency decree. >> jason, we know the prime minister has canceled his trip to vietnam. does he compromise and call for an election or does he do something more serious, which is crack down on the protesters? >> well, first of all, there's lots of families mixed in in the
main area, so there's a human cost involved. he's very reluctant to do something like that. the second reason is he has a lot of support in bangkok, but he doesn't have much support in the rural areas and that's where they protesters are from. if he goes in hard on these protesters, he knows when elections come, inevitably, either by the end of the year or earlier, that could cost him votes. so he's trying to walk a fine line here. he is trying to use the -- the military has been called in and they are takinall steps at this point to try and crack down. they've taken an opposition television channel off the air and blocked websites, so they're trying to take some steps. >> jason, thank you very much for the update. let's get a quick reaction and guest with our guest host,
darius. darius, how damaging is this for the markets there? >> the country's equity markets until yesterday were one of the best performing globally, up 10% this year. the currency is up 3%. i think that the recent developments are chaenging the outlook to the point that evaluations are not justifiable any more. the process clearly are going to last. they will damage the economy. they will lower confidence that may disrupt businesses. i think you should continue to sell stocks and you should go short on the back. >> we are down about 1% across most of the markets. let's find out what's going on in london. >> ross, general weakness coming through on the ftse by more than
1% in london. basic resources are weaker. eurasian and xstrata trading lower. bur berry is trading lower. they gave a cautious outlook for that particular company. and enquest, which was spun off of petrofac earlier this week is trading down. british airways weaker on the back of -- well, it's probably to do with the broader market rather than the iberia news. but what we've heard is ba and iberia have finally merged. and on marks & spencer, q4 like-for-like sales look to be okay. there's weakness in the food area. general outlook for profits going forward and the ceo talking about consumer spending
remaining flat. all that is dampening down m&s. >> anna, thank you for that. annette, banks are under pressure. why that? >> banks are set to have more than 12 billion on their balance sheets. at recent debt auctions, german banks didn't participate and they didn't buy into debt from greece. >> okay. what about we're talking about airlines, of course. what is happening with lufthansa? is there any reaction on the news from overseas? >> there was positive reaction at the start of the trading day as the strikes from the pilot side due to next week are constant. they are called off. but now with the general market tanking, lufthansa shares are now trading down by 0.8%.
in general now with both parties on the table, it is more likely that lufthansa pilots are actually asking for a pay hike of roughly 6.5%. they wanted to withdraw from that demand. if lufthansa would have said, okay, that's fine, all pilots across the whole holding are different holding companies of lufthansa will have the same terms and conditions as the german pilots, but this is now off the table as lufthansa doesn't want to extend this labor protection and as well, the high pay level to all other lufthansa employees outside of germany. that's all here. back to europe. >> but will this consolidation have any impact on the planemakers? stephane has a report in paris. >> and we've got a report this morning saying that airbus received 60 orders since the beginning of the year for the first three months of this year, including 49 orders in march.
airbus doesn't want to comment on the report because the company is due to report the numbers officially by tend of this week. we don't know if these growth figures are before consop addition, but that is to report 83 net orders from boeing in the first part of this year. that is big, positive news for the planemaker. but the stock is down like the rest of the market. we're off 1% right now at eads. we had a positive start in paris and now the stock is much lower, we are losing 1.8% on air france klm. >> there is new on consolidation. >> yes. the company may be close to a deal with the brazilian air force. the air force would prefer the jet fighter, which is built
by -- and that's good news because we had recent news saying the president army would prefer the swedish jet fighter instead of the french one. a contract has never been signed officially. for that suggestion, that will be the first time that another country is buying this aircraft. that will be an important symbol. the stock is down, but it's clearly outperforming the french markets today. >> rafael, he's the player that got sent out and helped them to lose last night. no english teams left. that's very, very upsetting. for now, thank you very much, indeed. there's much more to come on the program as industrial production in the uk thrives or is rising unemployment taking its toll?
boj's optimistic outlook. >> meanwhile, here in europe, ba and iberai have merged. and in the united states, us airways and united reportedly in merger talks. >> so you're watching cnbc's "worldwide exchange." christine tan, myself, ross westgate and nicole lapin. so we're just about to get february pmi. the manufacturing output is up 1.3% on the month. better than the consensus of 1.7%. february industrial output up 1% on the month, better than the consensus of 0.5% gain. the biggest month since september '09, as well. manufacturing output up 0.8%, three months on three months february industrial output up 0.8%. three months on the three months. they're better than expected data. sterling has been weaker today.
just below 1.52 on the dollar. sterling is spiking higher off that low on the back of that news. as far as the stocks are concerned, we've been weaker today generally across the board. the ftse cnbc global 300 is down 29 points. most asian stock markets were down today, christine, and so are european stock markets. >> that's right. a bit of a correction going on. why? because we have gains in the past weeks and investors are taking the opportunity to cash in and take profits off the table. the nikkei 225 using the strong yen as an excuse. the shanghai composite off 0.9%. we did get news that the pboc is draining some liquidity from the market. the hang seng is down 0.3%. elsewhere, the kospi is one of a few markets which ended to the upside. the bombay sensex trading down 1% and the aussie market trading off 1%.
overall, we're seeing a correction here in asia all because of fears of higher interest rates in the u.s. nicole. >> and that's the focus, christine, today. we are getting more fed speak out of washington today. we're getting same-store sales in the united states. market futures are lower about 42 below fair value at this hour. this is after the dow finished farther away from the 11,000 mark yesterday, 10,897, off 72 points. let's bring in peter cardillo now, the chief market economist for us at avalon partners. bright and early this fine morning, peter, thanks so much for being with us at 4:30 in the morning new york time. let's talk about that fed speak. we had alan greenspan on capitol hill. we have a little bit of sound from him where he was basically taking a percentage of responsibility for our current economic situation. let's listen and talk out of it. >> i was right 70% of the time, but i was wrong 30% of the time
and there's an awful lot of mistakes in 21 years. so i'm not sure what good it does -- would you put this in the 30% category? >> i'm sorry? >> would you put this in the 30%? >> i don't know. >> so peter, he didn't so much ang that. he didn't answer if he put this in the 30% or the 70%. how would you answer that? >> well, i think he's partially to blame for this, obviously. he kept interest rates low and he also said that the fed is independent but by the same token, he also indicated that, you know, congress would at the federal reserve. so, you know, the blame is to be shared amongst the politicians as well as mr. green dd span. if you keep interest rates low for a sustained period of time, as he did, obviously, you're going to create a bubble. this is nothing new.
we saw that back in the late 90s when we had the speculative movement in the technology sector of the stock market. and that was all due to low interest rates at that time. and that could have been solved by, perhaps, not necessarily raising interest rates, but perhaps by raising the margin at that time from 50 to maybe 65% or 75% on that particular -- on those particular stocks that were moving in a speculative mode. and i kind of think that this could have been avoided also in the housing market. so, you know, 30% of the blame? he has part of the blame. maybe that's how thomas hoenig would feel. he's calling to raise interest rates now. would you agree with that?
>> well, i think the fed should move and raise interest rates. i think they have plenty of room. i think they could go up to maybe at least 1.5% without really rocking the boat here. i think there's enough strength in the economy and i think that that would probably help and not only would that help, perhaps, dampen future inflation, but i think it would help prevent, perhaps, another bubble, another asset bubble down the road. now, i am not suggesting that we're looking at an asset bubble, you know, within the next year or two, but if interest rates don't begin to move higher within the next, let's say, quarter or two, i think that there's a good chance that we could, perhaps, maybe get into a situation with where we might have another market crash in terms of equities where we could see another asset bubble form in equities. >> and you still say, though, there is strength in the economy. where are you seeing that strength? we're getting march chain store
sales today. that's expected to be a pleasant surprise for the market. >> for one thing, you know, i think the economy is probably going to grow between 3% and 3.5%. that's not real strong growth, but it's not bad growth. certainly, employment is turning around. we saw that last week's employment data. i think the economy is probably going to add anywhere from 100 to 125,000 new jobs going forward. consumers' confidence is up and i think -- and consumer spending, certainly, is headed in the right direction. consumers are feeling berts. and another thing is that, remember, consumers have paid down a lot of debt. we just saw that yesterday. consumers credit came down again. and that's a good sign that, i think, after this -- you know, after this severe recession that we went through, consumers, perhaps, here in the states are finally getting the message that they need to have a bit more equity over debt. and i kind of suspect that
people will be frugal going forward, but that there's enough of juice out there. and i think that that means that we'll see sustained growth. .i think the fed should raise rates. i thought they would raise them in the first quarter. obviously, i was wrong, but perhaps maybe in the third quarter. >> peter, you know, consumers market paring down debt, but i'm afraid governments aren't. how much is government debt going to be an overhang? we've got an ecb meeting today. they're concerned about the austerity measures being implemented in the peripheral. we're worried about greek bonds widening. isn't that going to be the major overhang? >> well, you see, that's the next major crisis and perhaps it's obviously not being driven by the consumer, but by governments. and just look here, we have spending that's continuing to go. we have deficits that are growing. they're growing to levels that are very, very scary at this time and probably are going to get worse. they're cured by raising taxes.
obviously, that's not the way to do it. you should be decreasing taxes because when they raise taxes, all they're going to do is spend that money again. and i think that is where the major fear comes. in fact, if you look at the price of gold, which yesterday rose to $1152, it's not about inflation. there's no inflation right now. it's all about the fear of deficits getting out of hand and perhaps, you know, a lot more nations like greece joining the parade, that they may have to have some serious, serious surgery in the future to avoid default and certainly, you know, we're not exempt from that. >> i also ask what do you mean by saying that the u.s. economy is strong enough to sustain higher rates? because about half of the current growth is coming from inventory rebuilding and the
rest from very low interest rates and fiscal policy with spending at about 15% year on year this year. now, in the next fiscal year, discretionary spending by the u.s. government is going to fall by about 2% to 3%. this would be a huge shock to cp the. how would you raise interest rates without causing another recession? >> well, when i say interest rates, i'm not saying going from near zero to 1.5% on the fed funds overnight, absolutely not. but i think in small increments over the next, let's say, two to three quarters, i think that that would not harm the economy. i think that that would probably show -- that that would probably mean that we'll have small increments of high interest rates and i don't think that that is going to dampen the economy. and getting back to the inventory build up, obviously,
the economy did do well due to inventory adjustments. but as i said before, the consumer is spending again. he's not spending in big ways, but he's out there spending and that's all due to the fact that there's a better psychological feeling out there. once we get the job market continuing to show jobs growth, the economy continues to add jobs, i think that that in itself helps cure the consumer spending opinion and so far, consumer spending hasn't -- >> peter? >> yes. >> this is -- sorry to cut you off, but here in asia, we're watching treasury secretary geithner and his surprise visit to china. what do you think is going on behind the scenes that we're not aware of? >> well, for one thing, i think mr. geithner is going to try and play goodie mroemsy here. i don't think he's trying to and
i think the decision to put off the report until april the 15th, which probably would have labeled china as a currency manipulator is a wise one. and i kind of suspect that he's going to try and get some concessions now. whether or not the chinese move to set the yuan free any time soon, i'm not sure. i think they'll probably make some minor concessions. but i kind of suspect that they're going to probably have to wait. remember that china might be running a trade deficit. and if that is the case, if they do let the chinese yuan flow, it's not going to be beneficial for the united states nor to china. so i kind of think that there will be some sort of an agreement, perhaps a slow motion down the road. >> all right, peter, thank you so much for your news, peter cardillo, chief market economist at avalon partners. so, darius, we're going to thank you, as well.
welcome back to "worldwide exchange." it is 44 minutes past the hour. it's 4:40 in the afternoon. hong kong harbor, there you can see the weather is cloudy. i don't have the temperature today, but i'm sure it's humid here in asia. let's check on the data coming out from japan today. we have japan's core machinery orders today coming in lower than expected. let's talk about what this means with the chief economist at natixis. still with us, our guest host, darius kowachik. lucca, let me start with you first. what does core machinery orders drop mean? does this mean we're not on the road to recovery, is this a
setback? >> this goes along with our view that the recovery in the world economy is not -- is not going to be as strong as some people seem to expect. only the u.s. and in europe, also china, will remain the most important force behind the japanese recovery and industrial production than you've seen in the last few months. >> what does this mean for boj policy, though? >> it means japanese monetary policy, as has now been the case for a lot of years, this is what is going to dominate japanese policy making. i don't think that the economic
condition in the world are pointing to something different rye now. >> luca, i know darius has a question, but before we ask you that question, i want to ask you this, if you went to the boj right now fighting in flagz, what would you do as the central bank? >> the central banker has absolutely nothing to do. fighten inflation is a story of changing the structure of the economy. so it's a much deeper change. you cannot do anything in a classical liquidity trap. they cannot do anything. their contribution is to keep rates basically zero level. but the influence must come from fiscal position and central policies in japan. >> darius, jump in. >> well, i would agree with negative implications of global
growth. and tankan suggests that orders are likely to pick up later on. wouldn't you agree that things are actually posing quite well moving forward? >> absolutely. this bodes very badly for the japanese economy. this remains on a economy that is dependent on certainly growing and growth is expected to slow down. normalization with respect to the very, very positive data we had not only on the tankan survey but also industrial production. >> luca, will there ever be a change, a switch away from an export-led economy in japan? can they do anything on the domestic side? >> i don't think this can happen so quick. in fact, i don't think this can
happen at all. japan has been stuck in a situation in which it has to be at the edge of technology at the time. labor cost is still so high. and so it cannot be competitive on something like that worldwide. so it has to produce innovation and japan is very good at doing so. so it is investing rightly so in the battle front in research. this is what japan is right now. so if you invest so much money on investment and research, you cannot invest on a more bolled economy with a more than ammic domestic demand. so apart from what everybody says about domestic demand, there is no real drive behind policymakers in japan to stimulate consumg at this time. >> the japanese yen remains a strong currency. doungt the japanese government
should do something to support the japanese yen? >> no, i don't think they should do anything like this. i think the yen will remain a strong currency because japan is in a strong position in surplus in trade. the japanese yen was weaker in past years because of carry trade, because of people basically betting on the severity of the currency. with a strong interest rate differential with the u.s., with australia and other countries in which interest rates were implemented, the japanese yen should remain strong and probably intervention would make nothing to weaken it. >> luca, thank you very much for your view. let's do a quick check on the markets and reema tendulkar
joins us live from india. >> it's not looking too good here. in terms of the economic data, we have the full price which came out and that has risen 17.7% on a wide basis on the week ending march 27th. so this marx the second straight week in martha we are seeing an advancement. now there's a lot of expectation and this data reinforced the fact that the rbi may came out and hike the interest rates at that policy meeting. we are seeing all the stocks under pressure today. counters like hdfc, icici bank, all the semis showing cuts anywhere in the region from about 1% to the%. the other counter, under tremendous pressure, is sales. the government has approved a divestment of up to 20% taking
place in two tranches and this would help the government map up about 8,000 kronas. the other metal counters are not looking too good. hindalco, down about 2.3%. on the flip side, buying is seen in real estate and a bit of short covering is pulling i.t. stocks higher, as well, in trade. with that, it's back to you. >> let's hop over to saijal patel next to me and talk about what the rest of asia is doing. saijal. >> a pretty negative picture there. we still have worries about greece and worries perhaps interest rates could go up in the u.s. that prompted profit taking here. now, the exception was south korea's kospi. we saw a good rally in the tech stocks, soes that is where the support came from. japan with on the other hand, the nikkei 225 falling 1%.
the stronger yen continuing to be a sell-off in this market. this was a bit of a surprise, so that has worked the sell-off in some of those machinery stocks. i want to mention the fct in thailand, still trading down 0.6% right now as we see the political tension worsen there. the economy so far has been holding up. s&p analysts saying that the immunity for the political situation no longer holds true and, of course, today, you saw a lot of money coming out of that market, christine. >> and here in asia, what is the latest in the saga? >> they upped the offer by about 8%, or peabody did to $3.3 billion. macarthur is rejecting that offer. they're going to go ahead with that shareholder meeting on april 12th to vote on its purchase or offer for glouster coal. it's a complicated deal, which
in effect gifts noble about 25% in macarthur. peabody has asked the government to intervene. analysts are saying this could be a stalling tactic because peabody, they might be trying to have some of those major shareholders like cnoc and others come on board. >> lots of strategy going on behind the scenes there that we don't know about. let's get a quick thought from darius now. darius, looking at your notes, i understand that you're actually buying the japanese yen. >> yes. i believe that will be the most attractive currency for the remainder of the year. i think the threat of double dip in the global economy towards the end of the year will lead to a reversal to the current trade, a flight to assets such as treasuries, they're active right now, and the japanese yen.
and 109 to the euro. >> we'll have to leave it there, unfortunately. darius, thank you very much for your time. nicole. >> coming up on "worldwide exchange," first, it was delta and northwest. now cnbc has confirmed that united and us airways are in merger talks. plus, british airways and iberia have just signed an agreement. what is the future for the ever shrinking airline industry? what does it mean for us?
welcome to "worldwide exchange," in the united states, us airways and united are reportedly in merger talks again. >> meanwhile, in europe, stocks taking a beating ahead of an ecb rate decision later today. >> and here in asia, as u.s. treasury secretary tim geithner head to beijing, china's pboc warns of the pit falls of a rising yuan. >> great to see you here on "worldwide exchange." i'm nicole lapin. it is 5:00 in the morning on wall street. welcome to the start of your
global trading day. and it seems like we're getting farther and farther away from this 11,000 mark. don't shoot the messenger. the dow closed yesterday at 10,897, off to 72 points. now we are off in terms of futures down about 26 below fair value. ross, we are hoping to get a stronger than expected slew of retail reports today. we're getting same-store sales, which are supposed to be a pleasant surprise in markets. but you are always a pleasant surprise in my morning, i have to say. >> well, that's very sweet of you. i am here most mornings. anyway, the consumer mice keep surprising us. that might be the story here. a lot of retailers keep being pessimistic about the consumer. but they keep spending, to a certain degree. european stocks down about 1%, 1.5%. the cac 40 is weaker, banks
under pressure, as well. we've got greek spreads against the bund widening again. they've gone out to a record high. we'll talk more about that in a few moments' time, christine. >> as for the currency markets, we're watching the yen closely. all that risk aversion sending the japanese yen higher, 93 level to the dollar right now. the dollar continues to weaken against the yen. take a look at the euro. continues to remain under pressure dwens the dollar. 1.3297. sterling under pressure, 1.5197. not much reaction from the uk data because of all the political uncertainty surrounding the uk elections. we've got the ecb meeting today and it comes at a time when austerity is very much in the minds of investors. and greek spreads burst out to a
recordwide. we thought we had the fudge in place. have we not got the fudge in place? >> i think the problem with the agreement is that the details don't look half as supportive as the headlines do. the details say that the germans will only be there in extremists. well, actually, having to exhaust every single avenue knew of funding doesn't sound like much of a rescue package. we have to define what is subsidized. the germans would argue that anything that's away from the market is subsidized. but actually, they're going to an austerity package in greece. is it going to drive the economy back to recession? and they're getting no benefit in terms of the yield that they're paying.
then the greece could argue, what the hell is the point of it? i think the worry we have today is all of this seeing bring in a news kram vacuum. there has been no news and yet the spreads are widening and we're moving out all the time. this to me smells like quite a dangerous situation. >> we've been looking at dollar strength over the course of this year. it's been weakness of the old world. if you look at ba we call this, the ninja currencies, that's nafta, india and non-japan asia, they've done pretty well against the dollar. many of those currencies making or approaching fresh highs for the cycle. once we look at dollar strength, i think that's a reflection of old world weakness. i don't think the dollar is as strong as it looks, but it will probably benefit by default in
times of international turbulence. >> nick, you talk about the currencies. what about the japanese? our previous guest says he's buying into the japanese currency. >> we're absolutely not. a lot of people who did not participate in the break through the three-year down trend. once we got to 91.85 about the 21st of march wi, it looked as though the down trend was broken. a lot of people didn't want to participate in that. in six out of the last seven years, the japanese yen has appreciate in the last ten days before fiscal year ends. going up to the 31st of january, you had a situation where technically it looked very good, but many investors didn't want to buy it. they didn't want to be trampled in a stampede of repatriation.
perhaps these greek woes will be a pullback for that. we think there will be buyers inside that dollar/yen cross. >> nick, you're with us for the rest of the hour. plenty more to come there. british airways and iberai created a merger to creat europe's third biggest airline by revenue. the deal is expected to create synergies of over $5 million. he's confident that it's a gate step forward for the airline space. >> i see the proposed merger with iberia as being a significant step forward in terms of right sizing, you know, the industry. and i think further consolidation will take place. >> and it's leading up to the agreement stretched out for 20 months. we're delayed by issues by ba's pension deficits. but it's not only ba and iberia that have done reports that us airways and united are in merger
talks. let's get more on this airline consolidation. yevan kachank joins us from paris. thanks for joining us. first of all, ba and iberia, it hinged on ba sorting out their pension deficit. the concern has always been we've taken two fairly weak airlines. have we created just a bigger weak airline? >> well, don't say that we have a merger two between weak airlines. british airways is not a weak carrier if you consider the competition environment in which british airways is involving, considering that it has competitors like virgin atlantic on its own ground and major u.s. carriers as trade ahead. iberia is not weak at all. iberia is well managed and they were able to make profit the last years. of course, they suffered the
crisis like anyone. i would say the only weakness of eye beer ya is being a niche in a way being specialized in traffic between europe and latin america.iberia is being a nichey being specialized in traffic between europe and latin america. that is where they make most of their money in profits. by that's all. so both of those airlines were obliged to merge or up kwopg, collaboration in order to survive. in order to survive, to remain one of the big carriers in europe competing with lufthansa and its satellite, brussels airways and -- >> are they going to be able to do that now? >> excuse me? >> are they going to be able to do that now? are they now, with this deal, going to be able to compete with
lufthansa and the air france-klm alliances? >> well, in you count the number of carriers that may profit in the year 2009, they were able to make profits. by merging, those two carriers were able to set it up, able to compete with two other major european groups which are air france klm and lufthansa. it's the only solution for them to be -- to remain in the air transport industry for the coming years. >> is that also the only way for us airways and united airlines reportedly in merger talks, as well, so survive? as you know, they're not a niche like iberia, so they're dealing on a different scale. but is that the new normal for the airlines? >> what happens today, it's a
new offer of the ongoing process that started in the states in the 90s then moved to europe early 2000s. air flans klm emerged on all four. it's an ongoing process because the u.s., the north american market and the european markets are two very mature markets in terms of air travel. so when you have a country that is not growing and then you have new degreedy members of the party, and that you don't have any control of the cost of one of the major ingredients of the cake, which is sugar, for example, kerosene for our carriers, then you have to merge in order to get huge economies of scale that will allow you to reduce your cast and be able to survive on the long-term. >> thanks so much for helping us figure out the recipe to the airline story. it's a big story, obviously,
willie walsh that more consolidation in the airline sector is on the way. barclay's wealth management strategist told cnbc that emerging markets still provide value to investors, but not necessarily through their stock markets. they detailed four ways to play emerging markets. find out what they are on cnbc.com. and as we prepare for another day on the financial crisis on capitol hill, a cnbc contributor investors what a toxic asset is and what is needed. find out more on though stories at cnbc.com. >> there's another meeting of the ecb today. rates will be kept at an all-time low of 1%. sylvia joins us now from frankfurt. sylvia, as we were talking earlier, the spreads on bund against greek debt have widened to a fresh record.
so presumably, more questions about that? >> yes. i think greece is going to take center stage again. maybe the ecb is more on the sidelines of potential rescue packages and rescue operations as far as deliberations go at the moment. but we could hear things about collateral rules, for example. a few waex ago, jean claude trichet said there will be no special room for greece and we don't see any need for room for change. a couple weeks ago, he indicated otherwise. what are we going to hear about collateral for greece in general about haircuts, about what they can take to the ecb, etcetera, and maybe we will have a question or two about the leaked record from the bundes bank. as a couple of the german papers have been reporting here, the bundes bank is particularly unhappy about the imf involvement in this not quite rescue package for greece. that's what we have to call it.
the bundes bank is concerned that there will be less pressure on greece. all we've seen in terms of rescue packages isn't really a rescue package because the germans have so far said we will only stand by greece if they can't get any money from the markets. and they can, just the price is too high. >> yeah. the price, as you were saying, is this thing. how will this continue to weigh on the euro, nick? >> well, it is. it's not just the greek situation. it's focused the attention on some of the structural faults of the european institutions. greece is in triple digits and has 12% debt to gdp. so it's very, very difficult to look credibly at some of the
institutional framework which underpins the euro. and it is for that reason rather than just greece alone that investors internationally are selling euros. >> in this case, to what extent do we have to lay this at the door? she's playing for the domestic audience than anything else. we have to push this forward and politics are going to pay for it? >> correct me if i am wrong here, but germany has been reluctant to take that political lead. germany is quite happy to provide an economic lead. it has essentially deferred that political position to others, most notably, the french. and i think it's going to be a very difficult position for them to take. because if germany is seen to control both the political and the monetary elements of them, i
think it would come in on the system. i think ms. merkel has played this as well as she could. she's certainly not going to be in a position to write that. >> sylvia, we'll let you go. thank you. nick, you stick around. ahead of the u.s. open later, we are weaker right now across the board, pretty much where we've been nearly 2 1/2 hours into the session, down about 1% across the board. banks and mining stocks have been down. anna is with me in london to run through what is happening here. >> thanks, ross. we are weaker in london. the ftse 100 down by more than 1%. xstrata is the biggest loser. the mining seconder, oil sector, all of those on the ftse 100 is moving to the downside.
burberry is trading lower on the back of a note from nomura. british airways has just joined the gainers. it spent much of this morning not sure in which direction to go. british airways and iberia, of course, announcing their merger today. that is after an initial five-year period. the shareholders will get to vote for this in november 2010. now, the company the planning to create a holding structure here. briefly on m&a, that stock is down 1.2% on the back of their numbers, some concerns about rising costs and profitability and the uk consumer in the rests of this year. >> pretty much the same picture here, awas approximately banks are tanking. deutsche bank is down by ruffle
3%. commerzbank is following suit. alliance is down by 2.5%. that is mainly on the renewed stories about the greek and financial situation. the government spokesman was saying that the german stance have not changed, despite the record high risk premium that we are seeing on greek bonds. and those three companies mentioned alliance, commerzbank and deutsche bank have set to have the greek bond exposure on their books despite the fact that deutsche bank was saying earlier on this year at their annual press conference that they don't have a lot of exposure to greek bonds. but what means a lot is still the big question. but nevertheless, alliance does have greek bonds on their books and commerzbank, as well. that is all from here. with that, i'm sending it over to stephane. >> and it's exactly the same picture in paris. all the banks are trading lower.
credit agricole has the highest unit because of its banks. we have also a negative session from eads regarding the number of orders from airbus since the beginning of the year. 60 orders for the first three months of the year. 49 in march. eads is off 0.9% right now. now over to saijal for a quick view on the asian markets. >> japan's nikkei falling more than 1.8%. sparking a sell-off in a lot of the exporter stocks today.
the machinery stocks are getting hit hard on the back of core machinery orders for february. remember hong kong tracks rates there because of the dollar peg. the shanghai composite closing at a weak low, down 0.9% as we see liquidity continue to be drained from that market. it's down about 3% as we see political tensions escalate. on that note, i'll send it over to nicole. >> thanks so much, saijal. speaking of tensions, tiger woods officially returns to the green today with the masters golf tournament, kicking off in augusta, georgia. will he still be the favorite despite the scandals? find out later in the show.
off 72 points yet, 10,897. and markets are looking to more fed speak today. let's listen to a portion of what he said in his defense. i was right 70% of the time, but i was wrong 30% of the time and there are an awful lot of mistakes in 21 years. i'm not sure what -- >> would you put this in the 30% category? >> i'm sorry? >> would you put this in the 30%? >> i don't know. >> our next guest begs to differ. joining us now is jonathan teffer. what's your perception of what he said about the percentage of times he was right and the
percentage of times he was wrong? >> first, i'm absolutely astonished that he would say he was right 70% of the time and wrong 30% of the time. that is the way the chinese elise explain how a mass murderer ruined china. so i would say greenspan is loosely educated. i have no idea what his percentages are. but he has a terrible record. as the head of the fed, he did absolutely nothing to regulate subprime mortgager when everyone knew there was a problem. and -- >> you were right. you're getting very, very harsh, obviously, on greenspan. we know that you are not a fan, to put it mildly of greenspan. likening him to maojind dao is a
little harsh. do you feel slightly less angry at bernanke? >> i'm not at all angry at either one of them. i think the issue is that he did a poor job at his own job. but i think that's partly because the one green span did not look at forward looking indicators. for example, he kept interest rates far too low for too long. but the other big problem is greenspan tried to prevent financial crisis. right after the crash in october of '87, things stabilized. i think from there he learned a lesson that if you cut rates, inge will be okay so that's what he did after that. but the truth is, i think the way to think about financial markets is in terms of forest fires. in southern california, you have
very few small forest fires and a few catastrophic ones. in mexico, you have a few small forest fires and no catastrophic ones. greenspan basically was a firefighter putting out small fires and increasing moral hazard and the potential for a big blow up down the road. >> nick, i want to bring you in. do you think robert rubin was a firefighter was well? he's going to be testifying and some say that he should have picked up more warning signs and put out more fires. i'm taking more of an active roll in preventing citi's mortgage meltdowns. >> well, i think it comes with a lot of credit for the way in which he approached the macroeconomic issues of the mid 90s. and i think in that sense, he's shown himself to be actually quite a per septemberist leader and having a great deal of understanding of what is necessary in order to bring markets at least back towards some kind of equilibrium.
it's not just the price of money that we're concerned about. it's the quantity of it. and it's not only the quantity. it's what actually that money is then used for. and frankly, i share some of the criticism of the fed leader in not understanding just how much impossible to fulfill about it business was being written by the banking seconder in the early part of the last decade, tying bullet payments on to adjustable rate mortgages, which frankly, no chance of being paid in riding short-term interest rates. >> yeah. encouraging people to take out rates that are probably there. what is the lifetime for future policy? should we go back to an era of targeting asset prices much more? we sort of ignore asset prices
completely. >> well, i think use the interest rate to target asset prices is a blunt tool. >> but do we need or mechanic nirchls? >> let's say they don't even talk about regulation t. they could have regulated, for example, during the nasdaq double margin requirements at broker dealers, brokerages. that's something that the fed has the power to do. they did nothing. under regulation q, they can regulate the derivatives and how banks treat them. and so the issue isn't like whether they raised rates rapidly which weren't too low. they did absolutely nothing with the powers that they have. so it's a classic case of malfeasance. >> we have to leave it there. jonathan, thanks so much for joining us. nick is sticking around. also just to remind you, of course, keeping your eyes on what's going on with greece here at the moment, we have seen greek bonds, the spread against german bunch spread out to their widest on record. more when we come back.
welcome to "worldwide exchange." the headlines making news today out of the united states, they've been down this tarmac before, so maybe the third time is the charm. us airways and united reportedly in merger talks again. >> here in europe, stocks are down as worries over greece's financial stability intense. that is all ahead of an ecb rate decision later today. >> and here in asia, we're watching japan's disappointing core machinery orders putting a dent on the boj's optimistic outlook. >> great to have you with us here on "worldwide exchange." it is 5:30 in the morning on the east coast of the united states. we're expecting markets to open lower across the board. this is after the dow is moving more and more away from the 11,000 mark, closing off about 72 points yesterday. dow futures are down about 44 below fair value, nasdaq futures down about 8. and s&p 500 futures down about six. ross, you guys are feeling the
same sort of ho-hum markets in europe, as well. we had slim losses yesterday and bigger losses today 2 1/2 hours into the trading day. down 1.ta 25 foers ftse 100 and xetra dax. cac 40 down 177%. we've seen the greek bond spread on the 10 year out to a record wide margin this morning. we have got some upside, though, on a number of stocks. just drawing your attention to dutch mail company tnt will be familiar to a number of viewers. it's considering a lifting or partnership for its mail unit. just bringing that one to you. what about the currency markets? all the concerns over greece, how is that impacting the euro, christine? >> let's check the euro. euro/dollar, 1.3288.
sterling against the dollar, 1.5184. euro is also down, 0.8751. we are watching the japanese yen closely. all that risk aversion is sending the yen higher. right now trading at 92.88. of course a reading for eob. there's lots coming out from the fed, statements of greenspan, as well. >> yes, indeed, christine, we are watching them closely and watching them with us, we're lucky to have ken mercadia with us on set in the global headquarters. nick parsons is also with us, head of strategy at national australia bank. dan, the last time you were on, you talked about this market being a rodney dangerfield market. and if people don't know, rodney dangerfield is something of no respect. this is a market that you feel has no respect. is that still how you feel? >> well, the market has climbed up from last march's lows. every new high has been met
with, well, it's about to go the other way. so no one has believed this is going to be sustained, yet here we find ourselves some 70% higher. there's no doubt eventually that call will be right. trees do not grow through the sky. >> we're flirting with that 11,000 mark. we're flirting more and then we go away. are we going to get there? >> there's no doubt we're going to get there. i don't put much stock in these round numbers. whether it's 9,822 or 11,000, it gets people thinking. the danger about round numbers is people think, it's some sort of milestone and we've hit it. now should i come out of my portfolio because i don't want to give it all back? maybe it's not so bad for the markets. >> we have to do some really important cutting. we have to take out a hatchet versus, you know, a scalpal.
>> everyone has been focusing on what the interest rates are going to be. i think that's one of the most telegraph things. everyone has a plan of rising interest rates scenarios and how they plan to take that into their own considerations. but i think the real issue is what chairman bernanke was talking about yesterday which is deficit spending. but if we keep taking the taxes and spending it on other things, it's going to be a problem. it's getting to a time where we have to look at deficits and tackle them closely. we've seen what's going on in europe and greece. it's detrimental. >> ross, you're seeing that first hand. >> is there a greek lesson for the u.s.? >> well, we get worried about greece because currently its deficit gdp ratio is at 12el 8. the last time i looked, the u.s. had over 11. greece has called in the imf.
its plan is for one over austerity. at least it has a plan. it's by no means clear for the international investor looking into the united states what that plan is to get the deficit down, other than simply crossing your fingers and hoping for growth. 8 million americans have lost their jobs over the course of the last 2 1/2 years. we created 160,000 last month. but i think we're still in a situation where we're pinning our hopes on job growth, our hopes on economic recovery and, you know, the plan to get the deficit down is simply not yet been formulated. >> ken, aren't we always going to get more growth, though, in the states than we are in europe? >> well, i certainly hope so. but i'll tell you what, if you wanted a stimulus package for the market, all we need to do is having capitol hill start talking seriously about debt reduction. if you really believe these new taxes being imposed on them is going to solve the problem, i.e.
get deficits going and get growth going again, then i don't think there would be so much angst about it. i don't believe that there's a feeling that it's going to do anything, other than picking their pockets to go and spend more money. so i think the most stimulative thing that could happen for the markets and the healthiest thing for our economy is for congress to get the message that deficits are really, really important right now and just any talk that sounds serious about getting that under control could be the medicine the markets really need to fuel not only growth past 11,000 but to make new highs if we could get that under control, we would be in great shape. >> congress, are you listening to ken kayman? i hope they are. >> he stays with us for the rest of the hour on set. no coffee, even. just water. he is a trooper. still with us, of course, our guest host, nick parsons. one country, of course, we're watching the deficit situation is over in japan.
that's the country which is deficit we're watching closely. as for the markets today, let's cross live to tokyo and check in on the trading day in tokyo. makiko joins us. >> hello, christine. tokyo stocks faced broad selling today and the nikkei 225 fell over 1%. investors were discouraged. automakers were down with toyota and honda both dropping nearly 2% while mazda plummeted over 4%. electronics faired no better with bellwether sony dropping over 4%. core machinery orders fell more than 5% in february. it came as a negative sprees as the market forecast had been for growth. real estate shares were sluggish. data shows that the office vacancy rate in central tokyo hit a record high of 8.75% in
march. bucking the trend was fuji electric holdings. shares rose to a year-to-date high after nikkei reported that large scale tests of next generation smart gifts grids involving some 5,000 households are set to begin this fiscal year. that's all from tokyo, the nikkei business report. back to you, christine. >> thank you very much for that. nicole, i bet there's an interesting story coming up after this. >> there's one that happens at 1:42 p.m. eastern time. i bet you know, actually, christine. tiger woods, yes, returns to professional golf, teeing off at the masters. we're going to go live to augusta.
>> that was tiger woods featured in the new nike ad that began airing in the united states on wednesday night. tiger officially returns to the business of professional government today as the first round of the masters tournament gets under way in augusta, georgia. that is where we find our darren rovell who joins us live bright and early this morning. daren, that is some ad. >> yeah, nicole. i mean, it's a little bit weird, given that tiger's father died in 2006 and that's his voice. who knows where it came from nike is not saying. the response has been weird, creepy, risky, and absolutely amazing. it seems like nike would be the only company that would dare to do anything like this. all i can tell you is the discourse, the dialogue over this ad is probably the most since tiger's famous ad where it's dribbling the ball off his golf club and hits it. over the last ten hours, this
has lit up the social media, the twitter verse, everyone is talking about it. >> yes, everyone is talking about it, indeed. some of the questions i have gotten in is well, if this nike ad works, do you think the other sponsors are going to get back on the tiger bandwagon? >> well, they already have in a sense. the fact that upper deck announced yesterday fully that they're going to have autographs of tiger, used golf balls from what he's hit on the range signed by tiger. if he wins, they've even had a whole program that they're going to come out with tiger signed shirts with the inscription 2010 masters. so they've been involved. electronic arts came out with an online video game for tiger this week. the ones of the sidelines have
been ntag hoyer. tiger will lose three sponsors in this whole process over the last 1 had 4 days in accenture, at&t and gatorade. but i've been surprised how active at least those three have been. >> daren, if he wins, do you think all this controversy is going to affect his performance inspect. >> there's one reason why he came back here, we know that. augusta national, the hallowed grounds, the patrons, over the last three days people haven't been heckling him, there's been no derogatory comments towards him. if he wins, it would be amazing. the oddsmakers have him at five to one. though today in the local paper, 58 members of the golf media were asked who is going to win the masters and only three said
tiger. so we'll have to see. is this the rock bottom for him and then he comes out and there's nothing else? and if he becomes the number one player in the world, he's all good? who knows. who knows what else is out there. there's never been a story like this. so i think it's one, how does he play on the golf course and who, is there something out there that could bring him down again? >> you can follow darren, darren rovell1 on twitter. we mentioned that. he'll probably be tweeting throughout the day. darren, thanks so much for getting up with it. >> i was going to say, if he wins that tournament, that would be the most amazing thing oov he's ever done on a golf course. by all accounts, his driving this week has been terrible. but hey, it's going to away much-watched drive. in other news, ba and iberia
have signed a merger. the deal is expected to create synergies of over $5 million. >> u.s. treasury second timothy geithner is meeting with the chinese vice premier in bay junk and due to meet with chinese vice premier later today. geithner's trip comes amid swirling speculation that they would herald a change in china's currency policy. the bank of england is sort of hidden away. have we priced a lot in?
i think sterling is in a rather lucky position. they found something to buy it against. we're trading at 8 7.50, which is the lowest we've been in six weeks opinion so rather than the attention being just on selling sterling, you actually get another major currency that's in pretty much the worse shape than it is at the moment. our guess is that serlg can continue to outperform the euro. against the dollar, we're going to head back to 1.50. i think the potential, assuming there is a conservative victory, is that sterling will get a post electric boost and will end the quarter pretty strongly. >> does that take the appreciate yuf off gilt? >> i don't think it does. capital markets are rising across the world. it may be that gilts don't have to underperform as much as people feared. but at the moment, they don't look particularly safe haven right now. >> do you think tiger will win?
>> no. i would play him at five to one. >> five to one, making a note. coming up, we are going to take a closer look at the u.s. day of trading. we are also looking ahead to u.s. president obama and russian president medvedev he signing a treaty of nuclear arms in prague. we're getting live pictures of people gathering. they're expecting to sign this any minute now. as soon as that happens, we'll bring it to you live on "worldwide exchange."
front page of the journal today. this is a pretty good sign. >> there is no doubt. corporations have gotten the message and is starting to build up balance sheets. we're starting to see this right now as consumers come down and start to build up their balance sheets. corporations have gone through that. they have done the layoffs. we've seen that certainly in the employment numbers. balance sheets have gotten a lot stronger. we have almost record levels of cash now on corporate balance sheets. so a buying spree might be the logical thing. as much as it might be bet the greatest things to hear in the too big to fail environment, now big is great to buy. the economies of scale almost favor being big.
>> yeah, look, in a global market, we talk about where the best place is to put your money. in terms of a safe haven, u.s. treasuries are not doing so well right now. we had an okay auction yesterday. we're looking ahead to another one. it's still kind of the global mattress. >> right. people were surprised by the success of the treasury auction. to me, it's the global mattress. when people say they put their money in the mattress, u.s. treasuries are the world's mattress. so where are you going to go? are people happy about low interest rates? no. but it's better than no interest rates. so you kind of close your eyes, all right, i'll put it there and we'll worry about it later because i don't want to be involved in the downside.
>> and all the world is a stage. ken cayman, great to have you with us. we're expecting u.s. markets to open lower across the board. futures are hovering about 40 below fair value right now. i'm nicole lapin in the united states. that's going to do it for "worldwide exchange" today. >> i'm ross westgate in europe. >> and here in asia, i'm christine tan. thank you very much for your company here on "worldwide exchange." >> we'll leave you with shots from prague where president barack obama is meeting with the russian president medvedev he. he certainly helped president obama race pressure on companies seeking to develop nuclear weapons. they believe they might discuss tougher sanctions on iran's disputed nuclear program. we'll leave you with those shots coming up next. u.s. "squawk box."